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Thursday, April 11, 2013

[chottala.com] Is Pakistan sinking? [ The Dawn -Karachi, Pakistan]

Is Pakistan sinking?

THE question of Pakistan's viability as a state is at least as old as the country itself. Recently a sobering article written by a former American ambassador to Pakistan has reignited the question and left many wondering whether Pakistan's "long-term trajectory is toward failure".

The ambassador belongs to the camp that sees Pakistan as moving inexorably towards failure, and urges the world community and regional neighbours to start "thinking about the political and strategic implications of an accelerated decline toward state failure" in the nuclear-armed country.

The next day, on the same pages of the same newspaper, there appeared another article on the same theme. This one written by Michael Krepon, cofounder of the Stimson Centre, focused more specifically on Pakistan's growing nuclear arsenal.

"A nuclear arsenal built on very weak economic foundations is inherently unstable," wrote Mr Krepon, arguing that strengthening Pakistan's economy is inherently in India's interest, and the best way to accomplish this is through increasing bilateral trade and investment between the two neighbours.

The concerns expressed by both authors are old, but not outdated. If anything, both articles are reminders that amidst the chaos and flux of a rapidly evolving moment, amidst the heady excitement of the first truly democratic transfer of power that Pakistan is undergoing, old concerns regarding the eventual viability of the state not only continue to linger, but are growing in urgency.

Connected to the question of long-term viability is the matter of Pakistan's enduring resilience. Another way of asking the same question, therefore, is not "how will Pakistan survive?" but rather "how has Pakistan survived?" The two questions are intimately linked.

Pakistan has survived due to its rich natural endowments. These include water and gas. Allow me to explain.

Pakistan is built around a river system, a hydraulic society so to speak. The rich water endowment means a flourishing agriculture forms the base not just of the economy, but the entire system of livelihoods that holds the country together.

Contrary to what the ambassador says in a small parenthetical comment in his piece, Pakistan is not "glued by the army" but it is held together by its agriculture.

Having seen Pakistan's economy up close for many years now, I'm struck by how large a role agriculture plays. Every year, the land throws up its rich harvest on two occasions: the cotton crop which starts coming in during August, and the wheat crop which is harvested from April onwards.

Both these crops are big enough to make the country a player in global markets. Both employ a labour force so massive that during their harvesting, industry leaders complain that the cities get emptied out and labour becomes a scarcity.

Both crops have large and significant industries built upon them, whether transport and storage, or processing. In the case of cotton, Pakistan's largest employer — the textile industry — grows atop the bountiful harvest.

Both crops are huge players in the country's credit markets, whether formal or informal. The size of the commodity operations that support the wheat procurement drive compares favourably with other enormous heads in the government's budget, like power subsidies. And the textile sector, which is an extension of the cotton crop, is the country's largest private sector consumer of bank credit.

The size of the commodity chains that are built around each crop, from the upstream fertiliser and pesticides sector to tractors and tube wells, to the marketing and distribution infrastructure and the labour force requirements in not only the harvest itself but the transport and marketing and distribution, are so huge that they form the backbone of the country and its economy.

The scale of the activity that gets under way every year when the harvest comes in is large enough to employ a labour force estimated to be more than 55 million people.

Couple this with the natural gas reserves that have fuelled our industry, and fired our stoves and ovens and geysers and served as feedstock in our fertiliser industry.

Today Pakistan is shielded from the full impact of hundred dollar oil because domestic gas accounts for almost half of the country's primary energy consumption. The only sector that has had to largely absorb the costs of hundred dollar oil is the power sector, and the circular debt is testament to the enormous destruction that high oil prices have brought with them.

Pakistan is built on nature's bounties, far more than anything else. Here lies the secret of the country's 'resilience', its capacity to bounce back, to muddle through.

No matter what the provocation — earthquake, floods, war, sanctions, recession — the arrival of the harvest twice a year gets the wheels moving, money starts to circulate, and an army of farmers and day labourers and brokers and stockists and middlemen and moneylenders and truck drivers begins to articulate itself, imperfectly mediated by another army of petty officialdom, and often gorged upon by large landowners and their connections in high levels of government.

Having seen all this with my own eyes, I must confess I'm not as troubled by the growth of the militancy and the bombings as I am by watching this natural endowment begin to erode away.

Pakistan's natural gas is running out, and our food security — the backbone of the country's resilience — is now in question, driven by growing water scarcities and deep dysfunctions in the agrarian economy.

The militancy and the extremism can be swept aside once their lifeline of support from within the state itself is cut off, and once the forces of mainstream economy and politics begin to assert themselves.

Without under the table support from certain sections of the state itself, militancy and extremism will suffocate in this environment, and the ballot box will assign them their true place in our society, like it always has.

But getting the forces of mainstream economy and politics to articulate themselves properly, especially in the face of the growing scarcities that are coming our way, is the real challenge.

The writer is a Karachi-based journalist covering business and economic policy.

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